Miami Real Estate Investment: Is Miami a Good Place To Invest?

Successfully investing in real estate — whether you are in Miami or anywhere else in the world — is all about correctly timing the market. Knowing when to enter into the real estate market can often be a bit of a challenge. Is Miami a Good Place For Real Estate Investment? Many real estate investors have asked themselves if buying a property in Miami is a good investment? You need to drill deeper into local trends if you want to know what the market holds for real estate investors and buyers in 2021.

Miami is a fairly walkable city in Miami-Dade County. Miami hits most people’s radar as a tourist destination, though it periodically hits the news when it looks like it may be hit by a hurricane. However, Miami is a large, thriving city with a strong housing market. Miami is home to just under half a million people.

Miami Housing Market is far larger than…

However, the Miami housing market is far larger than that – it includes much of southeast Florida and more than five million people. That makes the Miami real estate market the seventh-largest in the U.S., and it is the second-largest housing market in the southeastern U.S. However, that isn’t reason enough to consider investing in the Miami real estate market.

Before the coronavirus pandemic went global, there was talk about Miami being overpriced. On the flip side, there was an over-supply of condos, since they were aimed at snowbirds and tourists. When all the tourists are gone, demand for hotels and tourist destinations collapsed. And many of the tourism-related jobs dried up with it, too. Economic uncertainty has had a chilling effect on the Miami housing market, too. The market has bounced back and is currently red-hot. The demand for South Florida real estate is evident in the median time to contact. Miami single-family homes are going under contract in 30 days, 53.8% faster than a year ago (65 days). Miami condos are going under contract 60 days, 29.4% faster than a year ago (85 days).

Top Reasons To Invest In The Miami Real Estate Market?

  • Ranked #12 in the US for real estate investing in 2019 (PwC).
  • High-quality investments at an affordable price.
  • High rental income.
  • Steady real estate appreciation.
  • Miami is in the top 10% nationally for real estate appreciation.
  • Over 70% of the population rents.
  • Low Property Taxes.
  • No income tax.
  • The low unemployment rate of 3.5%.
  • Great Airbnb Rental Opportunities: Massive Tourist Market.
  • Miami is a buyers’ market and investors need to capitalize on this advantage while it is still there.

Although, this article alone is not a comprehensive source to make a final investment decision for Miami we have collected ten evidence-based positive things for those who are keen to invest in the Miami real estate market. Investing in Miami real estate will fetch you good returns in the long term as the home prices in Miami have been trending up year-over-year. Let’s now discuss the state of the Miami real estate market, which can help investors who are keen to buy an investment property in this city.

The Geographic Constraints

Many of the world’s fastest appreciating real estate markets are attracting people coming for work and quality of life, but they cannot expand the housing supply to meet demand. San Francisco is surrounded by water on three sides, and they make things worse by limiting the height of buildings, so they can’t build up the way NYC has. In Colorado and Utah, a mix of federal parklands and vertical mountains limit where developers can build houses.

We’ve already mentioned that Miami is on the water. Miami has experienced a spurt in high-rise construction in downtown, giving it the third-highest skyline in the U.S, but other areas limit it so that high rises don’t block the view of the water. However, that hasn’t prevented the Miami real estate market from becoming the sixth densest housing market in the U.S overall.

Interesting factor to consider in Florida Housing Market

There’s an interesting factor to consider in the Florida housing market, and that’s the massive retiree population. Many older people move to Florida for the mild weather, and they’re rather immune to housing price fluctuations. Older people who already live here stay in their homes. This results in fewer turnovers in the Miami real estate market, limiting supply for would-be buyers.

That explains why Tampa and Coral remain over-priced markets though jobs aren’t as plentiful there. Retirees who do leave the state periodically tend to keep their Florida home as a second residence instead of selling it. The Gulf Coast is more of a vacation spot than a retirement enclave, so there’s less competition for limited housing stock.

Miami’s Economy Development and Job Growth

Many people move to Miami for work. Miami is the largest urban economy in Florida, and it has the 12th largest GDP in the U.S. The World Cities Study Group classified Miami as an alpha city based on the level of business activity, human capital, and cultural activity. The unemployment rate in Miami hovers around 4% (before COVID-19); it is currently in line with the national average but often below it. Only Orlando has a better job market.

Miami-Dade County is a global tourist destination. Since 2011, overnight visitors to Miami-Dade have increased by 20 percent, and hotel room nights sold have gone up 22 percent. In 2019, Greater Miami welcomed 24.3 million visitors, an increase of 4.6 percent over 2018. Travel and tourism fueled a record-breaking 146,700 jobs in 2019. While MIA, PortMiami, and tourism are driving forces in the local economy, Miami-Dade has a vibrant entrepreneurial spirit among small businesses.

The Kauffman Foundation regularly ranks Miami as the top U.S. city for startup activity. For those residents in the County who are homeowners, life has also improved dramatically in the past eight years. County’s government’s one promising project on the drawing board is the Redland Market Village, which will create a vibrant downtown destination in south Dade. This project will bring 2,600 jobs and $351 million to the community during construction. Once complete, it will generate an annual economic impact of $40 million, and more than 400 new jobs, in addition to the 800 currently there.

2021 a year of growth to Miami

According to a new report from the University of Central Florida’s Institute for Economic Forecasting, Florida’s economy is expected to contract by 6% year-on-year in 2020 — but will bounce back with a growth of 7.6% in 2021. By comparison, the Conference Board, the nonprofit group of economists that calls U.S. recessions, predicts a 4.9 percent contraction for the American economy in 2020 and a 2% growth recovery in 2021.

Florida retail jobs are also predicted to snap back by 10% in 2021 after declining by 6.1% in 2020. For Miami-Dade, the recovery will be led by professional and business services employment, which is expected to average 3.7% growth in 2023, followed by education and health services at 2.9%. Manufacturing is forecast to decline by 2.8%.

Miami’s Massive Rental Market

Two-thirds of Miami residents rent, a rental rate rivaling that of New York City. This is partially due to the number of people working in seasonal and temporary jobs in the tourism business. It is partially due to the limited housing supply relative to demand. And it is partially due to the high cost of housing, even inland, relative to local wages. This is leading many investors in the Miami real estate market to buy single-family homes to be carved up into multiple units, each one rented out individually.

As the largest city in Florida, it would end up with multiple large universities for that reason alone. However, Miami’s international appeal and unique position have made it an education and research hub, resulting in the creation of institutions like Florida International University. There are almost forty colleges and universities within forty miles of Miami, hosting over 350,000 students. Ironically, Miami University isn’t among them – that’s in Ohio. The University of Miami, though, is located in Miami and enrolls more than 17,000 students.

Latest Miami Rental Market Trends:

Around 33% of households in Miami are renter-occupied. As of March 27, 2021, the average rent for a 1-bedroom apartment in Miami, FL is $1,600. This is an 11% decrease compared to the previous year.

  • The average rent for a studio apartment in Miami, FL is currently $1,350. This is a 13% decrease compared to the previous year.
  • The average rent for a 2-bedroom apartment in Miami, FL is currently $2,048. This is an 11% decrease compared to the previous year.
  • The average rent for a 3-bedroom apartment in Miami, FL is currently $2,800. This is a 7% increase compared to the previous year.
  • The average rent for a 4-bedroom apartment in Miami, FL is currently $4,200. This is a 40% increase compared to the previous year.

The Zumper Miami Metro Area Report analyzed active listings in February 2021 across 30 metro cities to show the most and least expensive cities and cities with the fastest-growing rents. The Florida one-bedroom median rent was $1,246 last month. Aventura & Fort Lauderdale were tied for the most expensive city with one-bedrooms both priced at $1,700. Homestead saw rent drop 2.0% to $1,000 and rank as the least expensive city.

The Fastest Growing Cities For Rents (Y/Y%)

  • Plantation had the fastest-growing rent, up 12.6% since this time last year.
  • Deerfield Beach saw rent climb 10.1%, making it the second-fastest-growing.
  • Lauderhill was third with rent jumping 9.1%.

The Fastest Growing Cities For Rents (M/M%)

  • Lauderhill had the largest monthly rental growth rate, up 5.3%.
  • Delray Beach’s rent jumped 4.9% last month, making it second.
  • Plantation was third with rent increasing 4.8%.
miami rent prices
Source: Miami Metro Report: March 2021

These are some of the most affordable neighborhoods where the rent prices are below the Miami average rent:

  • Palmer Lake – Mia Station
  • Mays Gardens
  • Brandon woods 
  • Cantisano
  • Coral Woods
  • Dixie Heights Gardens

The Strong ROI for Landlords

Investing in the Miami real estate market can give you strong returns. The high demand for properties in southeastern Florida relative to demand limits the ability of people to buy, creating a large pool of renters. Miami ranked second in the nation for the most cost-burdened renters in the country, paying more than half of their income in rent.

Rents aren’t as high as they are elsewhere in the country, but given the lower property values than markets like Silicon Valley or NYC real estate market, it is a good ROI. For example, the median home price is around $350,000, while the median rent is $1900 a month. A $1900 a month rent would be considered a burden for a household earning $70,000 a year, while median incomes in the area are $50,000.

Miami Landlord-friendly market

Whether you’re renting to students, low-income workers, or snowbirds, potential investors in the Miami housing market will be glad to know this is a landlord-friendly market. Florida doesn’t have laws on rent control. Security deposits aren’t capped, and you can start eviction if the rent is three days late. Damage to the property requires a seven-day conditional quit notice, while repeated lease violations allow for a seven-day unconditional notice.

 

Contact us and we’ll get you the best opportunities!

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